According to The Atlantic’s Derek Thompson, individual box office flops like The Lone Ranger aren’t a huge problem for Disney because a majority of its revenue comes from its broadcast and cable television divisions. Cable is here to stay for the foreseeable future – as long as that’s true, Disney properties like ESPN and the Disney Channel will continue to do just fine:
The movie business is a rotten thing. American audiences don’t go the movies every week, so they have to be lured with egregiously expensive marketing campaigns for a handful of tentpole movies that, if they blow up, can destroy quarterly earnings for the film division and take down careers. The TV business is somewhat the opposite. The subscription fee model (wherein a sliver of your cable bill goes straight to the networks’ pockets) guarantees that cable networks get paid with or without a “hit.”
Ben Thompson -The Cord-Cutting Fantasy:
The truth is that the current TV system is a great deal for everyone.
Networks earn much more per viewer than would be sustainable under a la carte pricing. Networks are incentivised to create (or in ESPN’s case, buy rights to) great programming; making your content “must-watch” lets you raise your affiliate fees. Viewers get access to multiple channels that are hyper-focused on specific niches. Sure, folks complain about paying for those niches, but only because they don’t realize others are subsidizing their particular interests. Cable companies know the cable TV business, and would prefer to put up with customer disgruntlement over rising prices than become dumb pipes.
A great post that perfectly demonstrates why we don’t simply pick-and-choose our channels from our cable companies: by making us pay for every channel, every network is able to fund the programming we love.